Do I need to register for VAT? A guide for trades

You must register for VAT when your taxable turnover for the last 12 months goes over £90,000. That's turnover, not profit, and it's any 12 months in a row, not the tax year. Check at the end of every month: when you go over, you have 30 days from the end of that month to register.

The VAT threshold checker adds up your last 12 months and shows when you'd go over at your current pace.

Turnover, not profit

The threshold counts everything you invoice that isn't exempt from VAT, before you take off any costs. For most trades that's all of your work, including the materials you pass on to customers.

So a tradesperson making a modest profit can still be over the line. If half of what you invoice is parts and materials, £90,000 of turnover might be well under half that in profit.

Any 12 months, checked every month

The 12 months roll. At the end of each month, add up that month and the 11 before it. The oldest month drops off as each new one comes in.

Say your turnover for the 12 months to the end of December 2026 was £87,500. In January 2027 you invoice £7,800, and January 2026, the month that drops off, was £5,000:

	Turnover
12 months to December 2026	£87,500
Take off January 2026	−£5,000
Add January 2027	+£7,800
12 months to January 2027	£90,300

You went over in January 2027.

The deadline to register

GOV.UK's rule: register within 30 days of the end of the month you went over. Your registration starts on the first day of the second month after.

In the example, you went over in January 2027, so:

• Register by 2 March 2027.
• Your registration takes effect on 1 March 2027. From then on you charge VAT on your work.

If you register late, you must pay VAT on the sales you've made since the date you should have registered, whether or not you charged it, and you might have to pay a penalty.

If one month on its own will take you over

There's a second test. If you expect your turnover in the next 30 days alone to go over £90,000, you must register by the end of those 30 days, and your registration takes effect from the date you realised. This mostly catches a single very large contract.

If you only go over for a short while

If a one-off job takes you over and you expect to drop back under, you can ask HMRC for an exception. HMRC decides and tells you in writing; if it says no, it registers you.

What VAT does to your prices

Once you're registered, you add 20% to what you charge and pay it over to HMRC, minus the VAT on what you buy for the business.

Homeowners can't claim VAT back, so for them it's a price rise. A £500 job becomes £600, or you keep the price at £500 and take home less. Businesses that are registered themselves usually don't mind, because they claim it back.

That's why the months before you cross the threshold are a good time to look at your prices. The hourly rate calculator and the job quote calculator both show prices with VAT added.

Construction work for other businesses

If you do building and construction work for another VAT-registered business and it's paid through the Construction Industry Scheme (CIS), the domestic reverse charge usually applies: your customer accounts for the VAT instead of you. It doesn't change work for homeowners.

Registering before you have to

You can register voluntarily below the threshold. It can make sense if most of your customers are VAT-registered businesses, or if you've bought expensive equipment and want to claim the VAT back. For a trade working mostly for homeowners, it usually just makes you dearer.

HMRC also has simpler ways to work out what you owe, such as the Flat Rate Scheme. Check the rules for your business, and ask an accountant if you're unsure.

What to do next

1. Put your last 12 months into the VAT threshold checker and see when you'd cross.
2. Set a reminder to check at the end of every month.
3. If you're getting close, work out your prices with VAT before you need them.